Malaysian energy giant Petronas is seeking more Asian partners to help develop its liquefied natural gas project in British Columbia, with as much as half its stake up for grabs.

The company, which acquired Progress Energy Resources Corp. in December for $5.9-billion, said Monday it is negotiating with potential investors to help develop its Pacific NorthWest LNG project after closing a deal to bring on Japan Petroleum Exploration, known as Japex, as a 10-per-cent partner.

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Some in the energy community assumed the deep-pocketed natural gas player would be able to handle the project on its own, which involves building a coastal terminal near Prince Rupert, where natural gas would be converted into a liquid and pumped onto tankers for shipment to overseas markets.

But on Monday the company said “the LNG sale to Japex is the first of several LNG sale transactions that are being negotiated with LNG buyers in Asia,” and spokesperson Alan Boras confirmed that up to 50 per cent of the project could be sold off.

“Fundamentally this is consistent with how Petronas was always going to do this project,” Mr. Boras said, noting it is in line with other major LNG developments. Chevron Corp. and Apache Corp., for instance, each own 50 per cent of the proposed Kitimat LNG project.

He also noted Petronas is willing to strike more deals akin to the Japex transaction. For some proposed LNG projects, investors have only received stakes in the export terminals themselves, whereas the Japex deal is an integrated transaction in which the buyer gets a stake in the terminal and natural gas fields, and also gets a share of the facility’s natural gas production for domestic use in Japan.

The rush to develop LNG projects in British Columbia comes at a critical moment for natural gas. Until recently, North American prices for the commodity were weak. Producers believe exporting it to Asia, where prices are much higher because of tight supply, will help boost their bottom lines.

Asian buyers are eager to get their hands on natural gas, as proven by Petronas’ acquisition of Progress last year, which was delayed while the federal government reviewed its foreign investment policy for Canadian energy.

Full financial terms of the latest deal weren’t disclosed, but Japex now owns 10 per cent of the Pacific NorthWest LNG project as well as a 10-per-cent stake in Progress’s North Montney natural gas play in northeastern B.C.

Mr. Boras said the deal helps to balance and diversify Progress’s portfolio, offering up cash that can be put toward developing the LNG project as well as its vast natural gas lands.

LNG partnerships are becoming much more common. BG Group PLC, which owns land on the B.C. coast that could be used to export LNG, said in February that it is looking to acquire natural gas to help fill the terminal.

Companies including Shell are also looking to develop LNG terminals, but some believe only two or three of the half-dozen LNG projects proposed will get the green light.

There are also questions about how quickly those that are approved will be built. Pacific NorthWest has plans to launch in 2018, but Hal Kvisle, chief executive officer of natural gas producer Talisman Energy Inc., thinks the current timelines are much too optimistic.

“I’m skeptical on timing,” he said in a recent interview. “I think that they will go ahead. And I particularly think the ones sponsored by the big international players – today, notably Shell and Petronas – those ones are going to go ahead. It is just a question of how long it takes.”

Environmental reviews, paperwork, and deal-making can take years.

Long-term contracts, however, will alter the deal market. Talisman, for example, has property in the Montney formation – a zone that could be a prolific natural gas supplier for LNG exporters – it wants to sell or share with a partner. This land, he said, could be sold now at a handsome price to a “highly-motivated” LNG player, or the company could hang on to it, continue to explore, and hope proposed LNG projects actually develop in the next four or five years.

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